Interest rate decision – property industry reacts

The Bank of England has revealed its latest base interest rate decision.

The Bank’s Monetary Policy Committee has held the rate at 3.75%.

The committee meets eight times a year and this is the fifth successive meeting where it’s left the taste unchanged.

Nathan Emerson, CEO at Propertymark, comments:

“A stable base rate provides greater certainty for the housing market. It gives lenders more confidence to continue offering competitive mortgage products while allowing buyers to make informed financial decisions.

“However, inflationary pressures have not disappeared. Higher household costs, including July’s increase in the energy price cap, alongside ongoing uncertainty in global energy markets, mean the Bank of England is likely to continue taking a cautious, data-led approach over the coming months.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: 

“The recent fall in inflation has given the Bank of England some respite from cost-of-living pressures which have been building since resumption of the Iran War hostilities, and explains this hold. However, the relief is likely to prove short-lived as the impact of oil, energy and other prices will probably prove harder to manage when the next decision-time for rates comes around.

“The level of interest rates is so crucial, particularly at the moment, to maintaining activity, not just in the price-sensitive housing market but across the wider economy where stability is key.”

Kevin Shaw, national sales managing director at LRG, comments:

“Today’s decision to hold Bank Rate gives the housing market another period of welcome stability. Buyers and sellers may still wish mortgage rates were lower, but the Bank Rate remains below the 4.25% recorded a year ago and the 5.25% seen two years ago.

“By the next interest rate decision in September, the outlook for energy prices, government spending and inflation should be clearer. For now, the market has a stable base, willing buyers and a good level of choice.”

Mark Manning, managing director of Northern Estate Agencies Group:

“Buyers have become far more accustomed to the current market and, provided homes are priced realistically, demand across the north remains resilient. People are continuing to move because of changing family circumstances, work or lifestyle rather than trying to time the market.

“Confidence will continue to depend on inflation and the wider economy, but the northern property market has repeatedly demonstrated its resilience despite the challenges of recent years.”

Nicky Stevenson, managing director of Fine & Country, adds:

“Today’s market is one of opportunity. With more homes available than we’ve seen for some time, buyers have greater choice and stronger negotiating power, but sellers who price their properties realistically from day one, are continuing to secure successful sales. In contrast, homes that chase yesterday’s prices are finding themselves lingering on the market.”

Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, adds: 

“For the property market, the practical read is that mortgage pricing had already moved ahead of the announcement – several major lenders raised rates last week – so today was unlikely to be the trigger for further movement, but the tone of the Monetary Policy Report could keep upward pressure on fixed-rate pricing into the autumn.

And Colleen Babcock, property expert at Rightmove says: 

“We’ve seen average mortgage rates increase over the last few weeks as geopolitical tensions have escalated, and the average two-year fixed rate is currently coming it at 5.11%. For broader context, this is up from 4.25% before the war in Iran started, but down from around 5.43% at the peak of tensions in April.

“For home-movers, rates remain elevated which continues to stretch affordability. However, while rates are high, they’re also relatively steady, which helps movers to plan and make decisions. Even relatively small changes in mortgage rates can have a noticeable impact on monthly repayments, particularly for first-time buyers, so any downwards movement in rates during the second half of this year would be very welcome.”

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